Not just equity but even gold investors are having a field day, with the price of the yellow metal hitting record highs. On Wednesday, it changed hands in India at ₹76,000 per 10 grams, even as its price in the international market reached $2,690 an ounce.
The large stimulus announced by China’s central bank is seen to have a role in the rise, as also uncertainty brought by intensifying hostilities in West Asia. Softening US Treasury yields after the US Federal Reserve’s rate cut have also fed appetite for gold.
Globally, the metal is used as a hedge against inflation and economic turmoil, but studies show that falling real rates of interest also offer it robust support. In India, we have the added factor of glitter-bug demand for jewellery, and as disposable incomes go up, we can expect more households to be buying gold.
As the festive season approaches, its price could firm up. Notably, there’s no fresh sovereign gold bond issuance on the horizon. India’s imports of this foreign exchange-draining commodity surged after the latest budget’s duty cut.
Maybe we need further efforts to dematerialize some demand by luring people to its paper version. Investors don’t need its literal glitter.